Dividends & Buybacks
Computer Communications Equipment
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Posted by mattschwartz (on March 30, 2012)
Very shareholder-friendly company and strong margins but not a buy for two main reasons:
#1 - Price
. For a company like this that's so steady in their FCF, applying a growth valuation (DCF) doesn't make sense. You want to apply an EPV (Stabiltiy Price) and here, this company is overvalued. But, mark my words, if it pulls back, I would seriously consider it.
#2 - Heavily reliant on three customers
accounts for 25% of revenue,
is 20% of revenue and
is 11%. That means 56% of revenues could disappear pretty easily and it also means that those guys have powerful negotiating positions to squeeze margins.